Montgomery County’s financial picture isn’t pretty.
Home sale prices are expected to drop 15 percent in 2009. More than 13 percent of the county’s commercial space is empty, up from 5.7 percent in 2006. And the unemployment rate, though low at 5.3 percent compared with the national average, is more than double what it was a year and half ago.
The average home sale price in Montgomery County:
1999: $242,033
2001: $275,079
2003: $363,147
2005: $507,340
2007: $550,210
2009, estimated: $428,495
Source: Montgomery County records
Those numbers, which mirror a softness in the labor and real estate markets regionwide, help explain why the county’s budget gap for the next fiscal year recently rose from a projected $370 million to more than $600 million, said County Council Staff Director Stephen Farber.
Though the number of homes being sold is up nearly 14 percent, the estimated average price for a house in the county dropped more than $120,000 from two years ago, according to county records. The estimated average sales price for 2009 is $428,495.
So far this year the value of new residential construction in the county has totaled $215 million, compared with almost $311 million during the same period last year, county records show. County staff estimated that new construction during the next fiscal year could be at its lowest in more than 10 years.
But those numbers don’t tell the whole story, said Anirban Basu, an economist with Sage Policy Group in Baltimore. He said the average home price numbers have fallen partly because of the tax credit being offered to first-time homebuyers, who typically tend to buy lower-price houses.
Basu said the overall housing market was stronger than the prices indicate, and there wereindications that the higher-end home market is recovering.
“Not to suggest that everything is operating at all cylinders,” he added.
As for the county’s overall economy, Basu said there’s reason for optimism next year as financial markets rebound. Many of the county’s wealthier residents lost “tremendous amounts” of money when the Dow Jones industrial average dropped to below 7,000 in March. As the market rebounds, so should the portfolios of the county’s residents and eventually the county’s overall financial health, Basu said.
